Stock of the day: Elders Limited
Elders reports a sharp 55% decline in profits, driven by low livestock prices, but focuses on growth with a $75 million Delta Agribusiness acquisition and strategic market repositioning.
(AI video summary)
This video was created on 18 November for IG audiences by ausbiz.
ASX code: ELD
Elders reports financial challenges but remains resilient
Elders Limited, a key player in the agricultural sector, recently reported a significant drop in profit after taxes, down 55% to $45.1 million for the year. This decline is attributed to low livestock prices and subdued client sentiment. Despite these challenges, Elders plans to distribute a final dividend of $0.18 per share, with 70% fully franked.
In a strategic move, Elders plans to acquire Delta Agribusiness for $75 million. Delta Agribusiness reported $53 million in earnings in the last financial year, and this acquisition is expected to strengthen Elders' market position and diversify its operations.
Navigating agricultural volatility
The agricultural sector continues to experience significant volatility, influenced by erratic weather patterns and global trade dynamics. Elders has entered a trading halt to facilitate an entitlement offer for institutional shareholders, aligning with its strategy to capitalise on favourable market conditions.
Investors view the Delta Agri acquisition as a promising step to reinforce Elders’ role in the agricultural cycle, particularly as global supply-demand shifts create new opportunities.
Market trends and strategic positioning
Elders is well-positioned in a complex market where agriculture is set for growth. The US-China trade dynamics could increase demand for Australian agricultural products, benefiting Elders. Its diversified exposure and stable livestock prices support future growth.
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